Modelling the Complex Dynamics of Modern Economies

29 November 2016, 12:00
- 13:30

Abstract

Jay Wright Forrester, a computer engineer and innovative management expert, is best remembered for his pioneering development of ‘system dynamics’ – a formal modelling method for capturing the complex, changing realities of modern economies and organsiations. Borrowing from the black box structure and feedback driven behaviour models of cybernetics, Jay Forrester’s account of business dynamics differed radically from accepted neoclassical understandings of economic decision-making. Rather than assuming that managers optimised supply based on factors of cost (or price), Forrester’s model stuck much closer to the actual viewpoint of business actors, showing how operational decisions were made on the basis of inputs and outputs further down the supply chain. Price was an outcome of this model, rather than the driving force behind it. This dynamic account of the economic system offered new, ‘disruptive’ possibilities for management scientists. Such insights were previously unavailable in formal economic modelling. More importantly, Forrester’s models offered new sites of managerial intervention and new techniques for governing production – ones that stressed innovation and disruption instead of cost efficiency. This week’s reading offers a crucial insight, through Forrester’s work and its widespread influence, into how cybernetics altered industrial and urban management in the later half of the 20th century, and serves as an important bridge between the economic imperatives of the mid-century and current management practices.

Coffee and tea will be served after. (Papers are pre-circulated and should be read in advance. Please write to Nima Paidipaty (lsp33@cam.ac.uk) for a copy of the readings)